In today's society, there is great interest in developing electronic fund transfer systems. Predictions for the future include the total elimination of both cash and checks, with all fund transfers being performed electronically.
However, the time when all transactions are carried out electronically is still a long way off. To accomplish this goal, all vendors would have to be linked through a common communication network including banks, credit houses and other financial institutions. Many major hurdles must be overcome, such as incompatible technologies and security systems as well as competing communication networks. These difficulties will prevent full scale electronic funds transfer systems from being implemented for quite some time.
Accordingly, in the near future, customers will utilize both cash and checks for purchasing goods. While full scale electronic funds transfer is not yet possible, the new technologies can be utilized to improve the security and efficiency of the more traditional money exchange techniques. The subject invention is particularly directed towards improvements in check writing and provides greater security and reliability.
The check writing and clearing system of banks is quite well known and need not be described in detail. Briefly, a customer typically establishes an account at a bank upon which checks can be drawn. When a customer (drawer) wants to pay for goods or services at a merchant, a check is written out to the merchant. The check includes the name of the merchant (payee), the transaction amount, the date and the signature of the drawer. The payee then deposits the check in his bank which then passes the check through a national clearing house. The clearing house then transfers the check to the drawer's bank so that his account can be debited.
There are some drawbacks to this check clearing cycle. For example, when the check comes to the drawer's bank, a significant amount of human handling is necessary to clear the check, including authentication of signature, and data input of the transaction amount. There is much effort being made to develop systems which reduce the need for human handling. One example can be found in U.S. Pat. No. 4,417,136, issued Nov. 22, 1983 to Rushby. In the latter device, deposit and withdrawal slips are printed with machine readable indicia.
There are other problems associated with the use of checks. For example, merchants are frequently leery of accepting checks from customers whom they do not know. To overcome the latter shortcoming, the banking community has developed a system wherein a check can be "certified". In this case, the customer will go to the bank and have funds immediately withdrawn from his account to cover the amount of the check. In this manner, the payee knows that upon receipt, funds are reserved and available to him at the bank.
In the prior art, developments have been made to automate the issuance of certified checks. For example, in U.S. Pat. No. 4,385,285, issued May 24, 1983, to Horst, a check dispensing terminal is disclosed which is connected on-line to the customer's bank. When the customer wishes to write a certified check, the funds are automaticaly debited to the account and a certified check is printed. However, the latter system requires that the customer go to the bank and operate a check issuing device which is connected on-line to the bank's central processor. The prior art does not disclose any system for writing a certified check away from the bank or at a time when the bank's computer system is not operational. Therefore, it would be desirable to develop a system where certified, secured checks can be written without connection to the bank.
The latter approach, where funds transfers can take place in an off-line manner, has been made possible through the development of so-called smart cards. As used herein, a smart card is intended to mean a portable transaction device which has an electronic memory for storing transaction information.
Examples of such smart cards can be found in U.S. Pat. Nos. 4,102,493, issued July 25, 1978 and 4,092,524, issued May 30, 1978, both to Moreno. In these patents, bankcards are defined having microprocessing capability and electronic storage. These cards can be used to store information, such as an account number, account balance and a secret password.
Another example of an electronic portable device can be found in U.S. Pat. No. 4,341,951 to Benton, issued July 27, 1982. The latter patent discloses a portable electronic device which is connectable to a bank card. The bank card is capable of holding information such as an account balance. In Benton, the microprocessor functions are carried out in the portable device rather than in the bank card itself. The subject invention is intended to take advantage of these emerging technologies where microprocessors and storage devices are extremely compact and can operate independently of the central processing unit of a banking system.
From the foregoing, it can be appreciated that a significant amount of electronic hardware and software has been developed to enable the construction of off-line electronic systems. However, to date, there has been no system developed which effectively combines the techniques of drafting certified checks and funds transfers in an off-line manner. Such a system must be capable of ensuring the authenticity of the certified check so that it can be readily accepted by a merchant.
Accordingly, it is an object of the subject invention to provide a new and improved system for handling fund transfers in a secure manner.
It is another object of the subject invention to provide a new and improved system capable of generating certified checks.
It is a further object of the subject invention to provide a new and improved system wherein transactions can be carried out in an off-line manner and be subject to later verification at a central processing unit.
It is still another object of the subject invention to provide a new and improved transaction system which may also be operated in an on-line manner.
It is still another object of the subject invention to provide a new and improved funds transfer system wherein the security of on-line transactions is further enhanced.